what is a business transaction 551124

EX 1-3 Business entity concept

Rocky Mountain Sports sells hunting and fishing equipment and provides guided hunting and fishing trips. Rocky Mountain Sports is owned and operated by Mike Weber, a well-known sports enthusiast and hunter. Mike’s wife, Susan, owns and operates Madison Boutique, a women’s clothing store. Mike and Susan have established a trust fund to finance their children’s college education. The trust fund is maintained by National Bank in the name of the children, Kerri and Kyle.

a. For each of the following transactions, identify which of the entities listed should record the transaction in its records.

1. Susan authorized the trust fund to purchase mutual fund shares.

2. Susan purchased two dozen spring dresses from a Chicago designer for a special spring sale.

3. Mike paid a breeder’s fee for an English springer spaniel to be used as a hunting guide dog.

4. Susan deposited a $3,000 personal check in the trust fund at National Bank.

5. Mike paid a local doctor for his annual physical, which was required by the workmen’s compensation insurance policy carried by Rocky Mountain Sports.

6. Mike received a cash advance from customers for a guided hunting trip.

7. Susan paid her dues to the YWCA.

8. Susan donated several dresses from inventory for a local charity auction for the benefit of a women’s abuse shelter.

9. Mike paid for dinner and a movie to celebrate their fifteenth wedding anniversary.

10. Mike paid for an advertisement in a hunters’ magazine.

b. What is a business transaction?